Leading providers of smart cards technologies and solutions have
developed strategies focused on contact, contactless, and
dual-interface services, reports Transparency Market Research (TMR)
in a new study. The four leading players in this space – Gemalto
NV, Infineon Technologies AG, NXP Semiconductors NV, and Giesecke &
Devrient (G&D) GmbH – collectively hold major shares in all the
keyregions relevant to the use of smart cards and smart card
terminals.
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According to TMR, the smart cards market is highly competitive and
has been consistently dominated by the above four players. However,
companies are currently vying to maintain modern standards and
implement smart card-based services and software as a part of their
core business strategies.
On the other side of the growth spectrum are new entrants such as
Watchdata and Eastcompeace Technology Co., Ltd. that are improving
stiff competition by introducing innovative solutions designed to fit
the way users want to conduct transactions today.
Improved Security Emerges as Most Wanted Smart Card Feature in
BFSI and Retail Industry
Conventional magnetic strip smart cards are currently extremely
vulnerable to data theft threats due to the absence of proper
encryption codes between the hacker and a user’s personal financial
data. This is easily negated by smart cards, where the EMV
chip-on-chip feature adds a high level of security to the user’s
data.
Additionally, the advent of NFC, IoT, net banking, and ecommerce have
all contributed to the growing preference of smart cards across the
world. The use of NFC and IoT is contributing vastly to the more
efficient implementation of smart cards, while the booming ecommerce
industry is making it imperative for banks to employ stronger
security measures against data theft.
EMV chips are rapidly becoming the global standard for user financial
access and transactions. They offer a safer way for users to perform
all transactions in the modern scenario of possible threats to data
and the protective measures that can be taken.
High Adoption Cost Continues to Make Vendors Hesitate from Smart
Card Tech
“A large percentage of consumers still use magnetic strip cards for
their daily transactions,” states a TMR analyst. “The U.S., for
instance, had delayed their nationwide adoption of EMV smart cards,
allowing a longer window of time for hackers and fraudsters to gain
access to all the information stored in a user’s magnetic strip
card.” Currently, about 130 countries are officially implementing
the use of smart cards and replacing magnetic strip cards.
The problem that applies especially to traders and banks in
developing nations is the high implementation cost associated with
smart card technologies. From the perspective of traders and vendors,
the high initial cost of installing EMV terminals is not worth it
until they receive a confirmation from major banks over the use of
smart cards on a large scale. Until then, they will stick to magnetic
strip card terminals. At the same time, banks were pushing the
responsibility on to the vendors, claiming that they cannot
distribute smart cards until there are enough terminals for users.
Most of these complications are being addressed currently, such as
shifting the liability of adoption from banks to vendors and lowering
the cost of terminals and cards through government incentives and
using efficient production means. However, nations from Asia Pacific
and Latin America still have large percentages of consumers using
magnetic strip cards, still maintaining the risk of theft at a high
level.
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Contact Smart Cards Will Retain Leading Market Revenue Share
The global smart cards revenue generation is expected to expand at a
CAGR of 7.4% within a forecast period from 2016 to 2023. This market
is expected to be valued at US$8.5 bn by the end of 2016 and US$14.1
bn by the end of 2023.
Contactless smart cards are expected to expand at a CAGR of 11.5%
from 2016 to 2023 in terms of revenue. They form the fastest-growing
segment in terms of type. Contact smart cards will still manage to be
the top grossing segment for the same forecast period, and is
expected to reach US$7.7 bn by 2023.
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